The Bitcoin “Crash” Is A Patent Falsehood: Here’s Why

Nothing like that demented mainstream media narrative: talking about the Duck Dynasty guy’s personal views on gays non-stop, but kicking real stories like the Fukushima ongoing radiation crisis to the curb.

And when it comes to innovative technologies like Bitcoin, “our” “free” press is equally off the rocker.

Back in January, one Bitcoin fetched $13. When I began covering it on my podcast, the price was around $10 per coin. Today, even “post-crash” in mainstream media parlance, the same coin is worth $702 on the Mt. Gox exchange. That is a 54x return year to date, and the year’s not even finished yet. Find me a stock that has gained 54x during the same time period — would the media label that a “crash” also? I don’t think so.

The media is not your friend. Unless your name is JPMorgan Chase or Bank of America.

And the group who could be most helped by Bitcoin’s promise of frictionless money, liberated from constant fees, is the American middle class – a middle class hammered by increasingly stringent credit history requirements for loans, ruthless foreclosures, insane student loan debt.

But instead of learning about Bitcoin and integrating it into their small businesses, many are caught circle-jerking ’til blue in the face about how Bitcoin is a NWO / Illuminati plot to destroy the middle class. No plot needed; the existing Too Big To Fail financial architecture is doing a fabulous job of hollowing out what’s left of the middle class.

So be careful who you listen to. I’ve had several people ask me if I’ve lost my shirt on Bitcoin — poor things, listening to that drivel on TV. No, I have not. I’m not sure how it would even be possible to lose my shirt, considering Bitcoin’s value is up massively year-to-date, and I only invested money I could afford to lose, and I never sold during any of the media-instigated “panics”.

And yes: the drop after the Chinese government essentially outlawed Bitcoin was breathtakingly sharp, but doesn’t mitigate the growth Bitcoin has experienced regardless. (And really, for a currency that claims to be decentralized and no one’s water boy, having the Chinese government hastily outlaw you after a price run-up is quite the badge of honor.)

To close out here, if only I could pick “losers” like Bitcoin on a more frequent basis, I’d be very satisfied. If you’re interested in learning more about Bitcoin, you can start reading my bestselling e-book The Bitcoin Primer on Amazon Kindle (or the free Kindle app for iPad) within a minute. It is designed to be a true beginner’s guide to buying, selling, and safely transacting in Bitcoin.

Regardless of where this exciting currency goes in the short term, I think it is bound to transform daily life on a scale not seen since the adoption of the Internet itself.

Yeah, I mean, a 54x gain in value is actually a terrible sign if you’re hoping this will be a viable currency (currencies are useful because their value stays relatively stable, and wild fluctuations in either direction suggest a collapsing economy), but perhaps it’s not much of a “crash.”

Reasor

An excerpt from my comments to your November 30 Bitcoin sales pitch on this site, to which you never responded:

We sometimes tend to throw the term “pyramid scheme” around pretty
loosely, using it to describe any scam or confidence game; the correct
term for what Bitcoin is, though, is “Ponzi scheme.” Bitcoin’s value as
a currency derives from the willingness of new Bitcoin collectors to
exchange real money – which is to say, dollars – for Bitcoins. Buying
illicit goods from the Internet’s gutters is all well and good, but the
real scam is the sale of Bitcoins for real money to speculators, who
hope to turn around and flip the currency for a profit. It’s not a
mistake that the currency is designed to eventually become impossible to
mine by the private individual, whose best bet is to buy the coins with
real money instead. This is the essential design of the scam. Hence
your appearance in response to the publication of a couple of articles
here this week, hence your sale of a digital book through Amazon –
you’re doing damage control, trying to delay the inevitable, either to
buy yourself time to mine more before the funny money collapses, or to
buy yourself time to unload the inventory you have. Your involvement in
promoting Bitcoin to the public is a type of con known as a “pump and
dump.”

Tony

Supply/demand dynamics are ponzi scheme?! Thanks for letting me know! As far as I’m concerned, I have no intention to turn my bitcoins into dollars in my life time. Can I send money instantly / internationally / privately / at next to zero cost / without any restriction with dollars? Now that I’m using a much more efficient payment system, why would I want to turn back to the stone age banking system? Please advise.

BTW you seems completely clueless about the purpose of the mining process. Maybe we should have a talk about how you take benefits of the dollar money printing? The only benefits I have is that my savings worth less and less ever years. The dollar is the greatest Ponzi scheme of all time for the benefits of the banks. Thanks for backing these corrupted institutions.

kowalityjesus

ups for hilarious sarcasm

Reasor

To put what I and others have been saying here into even plainer
English: Bitcoin’s use as an anonymous international currency is almost
beside the point, and it doesn’t figure at all into sales pitches like
the ones that Seaman posts here. What he’s trying to get people to buy
into is currency speculation – buy Bitcoins now, they’ll be worth a
fortune tomorrow – knowing that the inflation is dependent on a never
ending supply of future speculators to sell your currency to down the
road. It’s hilariously unsustainable, and while the early adopters will
undoubtedly come out far ahead if they unload all of their Bitcoin
before the bubble bursts, the ones who bought in at the end will be left
with Monopoly money that they paid too much for.

If you’re mining your own currency just to trade with, more power to you. Know that you’re well outside the target market for the scam that people like Seaman are putting on.

Rassah

If uou can give me a downside to switching from writing letters to sending e-mails, or from using libraries to storing information on the internet, then maybe I’ll listen to whatever downsides you might have about bitcoin versus our existing money system. The leap in technology alone is astounding.

emperorreagan

Some disadvantages to switching from letters to emails:

Time compression: the expectation of immediate response impacts the time you have to digest and form a response as compared to the time scale of writing a letter.

Time consuming: ease of firing off a response coupled with the expectation of immediate response results in greater time devoted to correspondence.

Misunderstandings: With the time issues, email has brought new abbreviations & short cuts with less attention to content, which can lead to misunderstandings.

The downsides may not outweigh the advantages, so on the whole it may be in one’s best interest to adopt some particular thing. Even if the scales tip heavily in favor of some thing, there are always downsides to consider.

Rassah

Even if the scales tip heavily in favor of some thing, there are always downsides to consider

Well, can’t argue with that 😛

mannyfurious

The assumption is that a movement in any direction is “progress.” As we move in the direction of “quicker” and “more immediate” most people just accept that that is “progress.” Technological advances in general are accepted by the masses as “progress” but by and large technological advances rarely lead to tangible improvements in one’s life. Louis CK said it best with the whole, “You kind of just go through live never totally happy or totally sad. You’re just sort of satisfied with your product or not” bit.

Jin The Ninja

“from using libraries to storing information on the internet…”

the two are hardly mutually exclusive. the internet didn’t cancel libraries out- they very much still exist. one facet of info science: digital archiveship, which represents the preservation and catagorisation of a vast range of multi-media and information.

you really should get out more.

Tony

Dear Reasor,
Please never buy a single bitcoin, I couldn’t care less. This system already work and obviously doesn’t need you and any new users to work in the future. If you don’t want to benefit the advantage it offers as a payment system, good for you and move on while others like me are already enjoying this frictionless payment protocol that nothing else can do better. I’m not using this system for any future price of it but for the unique features it offers like plenty of other users. You
didn’t advise me though where can I find a better system to avoid being “scamed” by an open source protocol.

Rhoid Rager

I think the big hole here is that there hasn’t been anyone on this
thread that has explicitly stated why alternative currencies, such as
Bitcoin, are needed. Fiat currency is a Ponzi scheme, yes, but that’s
because its failing comes from its inherent flaw–usury. Usury is a
problem because there is no where left for the money supply to be
expanded. This is so because of peak oil. Peak oil is an energy problem,
which means our money problems are energy problems. Shipping things
long distances (aka globalization) is a very energy-inefficient way to
manage resources. Bitcoin, from my layperson’s view, seems to be a
currency meant for the global market to order things to be shipped at
long distances. The utility of Bitcoin as an alternative
currency to fiat seems useless in light of this. Real radical currencies
are local ones that have an entropic function built into them. But, in the end, we ought to do anything we can to get away from zeroed-out economic exchange anyways. Graeber’s Debt book is very helpful in understanding that debt isn’t necessarily a bad thing, but codifying it certain terms often is.

Kris Olhovsky

Bitcoin can be used locally in face to face, person to person transactions, as well as globally/internationally.

So I guess it satisfies your criteria for a “radical currency”.

Rhoid Rager

There’s no entropic function built into bitcoin, thus allowing hoarding. Bitcoin is not a radical currency in this sense.

Kris Olhovsky

“Hoarding” is just the derogative term for saving.

Neither a small amount of inflation, nor a small amount of deflation is a problem for a currency. It is only when we have hyper inflation or hyper deflation that this becomes a concern. There are a great many people who believe that a small amount of deflation is preferable.

I’m not actually sure what you mean when you say entropic function. Can you define an entropic function in the context of a currency for me?

Rhoid Rager

Actually, ‘saving’ is a euphemism for hoarding. The idea of saving ‘wealth’ in the form of money means you are effectively taking it outside of the realm of nature. Money is not designed to decay over time, unlike everything else in the universe. In fact, when usury is employed, money is the only thing that can actually reproduce itself without expending any energy. This is anti-nature; which is to say, it’s not just a fluke, but it has a real world effect on our ecosystem–the deleterious results of economic growth are too large to mention.

But even with a currency, such as Bitcoin, that is not subject to manipulation through usury, it is still harmful because it does not decay over time. This allows for accumulation, and the methodical construction of wealth inequality. Wealth is valued because it can be used as a means to an end, not for its own sake. This goes beyond simplistic classical economic notions like inflation or deflation. These are terms invented to explain the failings of central banks. But the very problems we believe we can use money to solve–such as social security, insurance, health care, etc.–are actually caused by the use of money, and its atomizing effects on society. A good book that covers all of what I have said and more is Charles Eisenstein’s book Sacred Economics. It’s available online for free, in line with his ethos of giving.

Andrew

I’d go farther, and say that currency is not really wealth.

Rhoid Rager

He might be trying to sell Bitcoin for his own benefit, but he’s probably bound to make more off of sales of his book. And he’ll likely be making that in fiat.

Kris Olhovsky

Ponzi schemes promise a return, and when that return becomes unsustainable, they collapse.

Bitcoin doesn’t do this, so it isn’t a ponzi scheme. It really is that simple.

Dingbert

Whenever someone calls something a “Ponzi scheme” online, you can be 99% sure it’s not a Ponzi scheme.

Jin The Ninja

a scam by any other name…

VaudeVillain

“Bitcoin doesn’t do this, so it isn’t a ponzi scheme.”

You’re sort of right… Bitcoin itself, as in the specific pieces of data being exchanged, are a currency. Not a currency I have any faith in, personally, but a currency nonetheless. It’s essentially impossible for the Bitcoin data itself to be a ponzi scheme.

Similarly, in a Ponzi scheme, the pieces of paper onto which the transactions are recorded, or the dollars transferred around in the process, are also not a Ponzi scheme… they are involved in one, but they are not, themselves, the problem.

The Bitcoin movement, taken as a whole, IS a Ponzi scheme. It absolutely does promise a return on investment, and unless people keep buying in with existing currency it WILL collapse. The Bitcoins themselves are innocent enough, the people who pimp them less so.

Reasor

At least someone’s reading what I post before responding.

Willis T.

OK Mr. Seaman .. suppose one buys Bitcoin ‘now at $702’ — where is the guarantee it wont drop back to $13?

Having ANY currency move 54X is one V-O-L-A-T-I-L-E currency. And people would be insanely crazy to buy into it, at any price.

That is all.

André Sá

Thank you.

Tony

Yeah so it is way more clever to hold some dollars that are printed unlimitedly and which the value will drop to zero in a couple of years GARENTEED.

kowalityjesus

I have heard many a specious guarantor in the conspiracy realm, a miraculous few of which actually fruited.

Kris Olhovsky

Hopefully you don’t actually think that dollar inflation is a conspiracy theory.

Rassah

Twitter and Facebook valuation rose much more than that in the first 5 years before they went public. When will Twitter and Facebook drop back down?

johnyq

Why don’t you look at the stock market of major publicly traded companies and look at their stock price – compare it to bit coin. even with the “CRASH” that apparently happens everyday according to USA Today and NY Times, it’s still well above many other investments. there’s no guarantee anything will stay current and drop, but it doesn’t technically need to be a stable currency yet. As of now it is an investment, until it grows and is more widley accepted as hopefully a reserve/online transaction currency. There’s no gaurentees with anything in life, but I can gaurntee you BitCoin is getting more attention – whether good or bad – it’s still attention. and the more people/murchants that use and accept bit coin as a means of exchange, the more legitmite it becomes. From the day bitcoin started, it has never fallen to 0 even with some of the worst news It could have. Unless it is outright banned from every country, it will flourish

André Sá

Dear Mr. Seaman: Try thanking the media instead of making ignorant assumptions about what you think the media should be. Try not putting all media in the same Fox-newsy bag. As faulty as they may be, they’re not meant to please you and you’d be way worse off without them. Whoever you fucking are… I can see now, after a long list of unfortunate posts, that the name “disinfo” is weirldy non-ironical. Or unintendedly doubly-ironical… which makes it literal. So yeah… unsubscribed.

Guest

And thank you for not publishing my comment, you “irreverent” courageous people…

André Sá

This site is against free speech. It belongs in spam-hell.

Kris Olhovsky

Criticizing bad reporting is like being against free speech, to you?

Jonas Planck

Aw damn. I was hoping it actually HAD crashed so I could afford to buy some…

Kris Olhovsky

Fortunately you can afford to. You don’t have to buy one whole bitcoin after all.

Dingbert

That would be what we call a “bull trap.”

Rhoid Rager

I’m hoping to start making my own currency when I get hens (again) next year. That’s a currency with intrinsic value everyone always wants.

kowalityjesus

a Ron Paul mainstay, competing currencies

Rhoid Rager

Apparently one person doesn’t like eggs. A Vegan perhaps?

emperorreagan

Maybe there’s a secret word of the day picked at Disinfo HQ that results in an automatic down vote.

Rhoid Rager

Well, ironically, we’re at the right place to entertain such conspiracy theories.

emperorreagan

And Disqus went down soon after this exchange, playing right into my conspiracy theory!

Jin The Ninja

just to put this out there: tamago gohan, with brown rice, toasted sesame seeds, tamari and a chopped spring onion with a bowl of miso soup, is hands down the best breakfast anyone has ever invented.

VaudeVillain

“But instead of learning about Bitcoin and integrating it into their
small businesses, many are caught circle-jerking ’til blue in the face
about how Bitcoin is a NWO / Illuminati plot to destroy the middle
class.”

Nonsense. Much like the “Obama the Messiah” trope, this is one you almost never hear from people actually advocating it, and almost exclusively from people trying to mock the very concept. Most people who know what BitCoin is and aren’t going anywhere near it don’t think it’s the work of some mysterious cabal vying for world dominance… they think it’s a scam, run by ordinary, run of the mill scammers, and don’t want to integrate it with their lives and businesses for essentially the same reasons they don’t want to integrate 419 scammers into their lives and businesses.

Rassah

Most people who know what BitCoin is and aren’t going anywhere near it don’t think it’s the work of some mysterious cabal vying for world dominance… they think it’s a scam, run by ordinary, run of the mill scammers

That they even think that actually proves that they don’t know what bitcoin is. If they knew what it was, they would know that there is no one behind the system to actually scam anyone. It’s just an open tool, like e-mail, that anyone is free to use however they wish, but which just happens to have tons of benefits over the existing system.

VaudeVillain

The people who started BitCoin, who create and sell them for profit, who originate the system, are scammers. It’s not a tool like e-mail at all, because a tool like e-mail does not purport to carry economic exchange value and is not intended to be bought, sold, or exchanged for goods and services. One could, and many people do, certainly use e-mail to help organize such transactions, but e-mail itself, as an end-user service, is not the medium of exchange.

Rassah

The people who started BitCoin

Only one person started bitcoin, and his entire system is completely public, so it doesn’t even matter who he is. He’s not in control of it.

who create and sell them for profit

The only way to create them is to spend tons of money on specialized computer hardware, pay tons in electricity to run that hardware, and use that hardware to verify all transactions and secure the system, a very valuable service that the system pays them for. They can’t always sell for profit, since what they have to do is basically run a security business, and that business is not always profitable.

It’s not a tool like e-mail at all, because a tool like e-mail does not purport to carry economic exchange value and is not intended to be bought, sold, or exchanged for goods and services.

It is a tool like e-mail, because all a bitcoin is is just information traveling over a network. In e-mail’s case that information is readable text, in bitcoin’s case that information is value. All money is essentially value invormation, and there is no other simpler way to transmit value over the internet than with bitcoin. Not with e-mail, anyway, since all you can do with e-mail is instruct someone how to transmit value over some other network.

Dingbert

“Only one person started bitcoin . . . He’s not in control of it.”

Many still doubt that Nakamoto is one person. And, as I’ve said before, a person mining and saving since Bitcoin’s creation would have ~1M BTC now–about 1/12 of all BTC in circulation.

Nakamoto, early BTC miners, BTC exchanges, and wealthy speculators all have the ability to manipulate the currency, intentionally or otherwise (see the crash earlier this year due to Mt. Gox going down).

Rassah

Don’t forget, many of them are poor computer nerds, not dastardly financial investment gurus. Their market manipulation skills are on par with million dollar lottery winners. I suspect their ability to properly maintain their financial status is the same as well (Google Lottery Curse)

many formerly ‘poor’ computer nerds now control trillions in assets, and indeed have a high ability to manipulate markets and create monopolies.

any self-respecting ‘analyst’ should know that.

Rassah

If by “trillions” you mean a couple of million, and if by “manipulate” you mean use it to buy useless luxury things without concern for long time financial security, then sure.

Also, “monopolies” is a boogie man term. There are no such things, since everything has competition. There ARE successful companies that are the best at providing some product or service.

Andrew

> Also, “monopolies” is a boogie man term. There are no such things, since everything has competition.

Don’t expect me to take anything you say from here on as credible.

Rassah

Ok, prove me wrong. Name one monopoly.

Jin The Ninja

microsoft- cited several times by the SEC and sued by the EU (i believe the lawsuit was several tens of millions in fines).

actually nearly every tech company with major marketshare has had the accusation leveled against them (apple, sony, intel)- and quite accurately so.

Rassah

Cited for antitrust for embedding its browser, but lost the browser war to Firefox and Chrome even before the lawsuit came to and end. Also had competition in Apple and Linux, and Linux was (and still is) the most widely used OS in corporate internet infrastructure. Quickly lost leader status in search to Google, and is now losing leader status in office products to Google and OpenOffice. All without anti-monopoly regulations.

All of those you mentioned are just market leaders who happen to sell more products than their competitors, but they still have competitors, and have to fight to stay ahead (Apple losing to Android, Sony fighting XBox, Intel fighting AMD and now NVidia). Yes, they all had the accusation thrown at them, but those accusation were scare terms that weren’t actually true, like calling someone a “witch!” in the old days.

Jin The Ninja

okay, cato institute. you are simply proving Andrew correct in his inability to take you seriously.

i get it, you’re a pro-corporate, ‘anarcho-capitalist’ (ps us real anarchists want our ‘anarcho’ back) with a serious hard on for bit coin. your comment history reeks of bit coin speculator.

have a good one my troll friend.

Rassah

Actually, the monopoly thing is from my econ classes, where they went over business threats that include competition and substitution (monopoly on soda still has substitution threat from milk and juice), and pointed out that monopolies simply don’t last. Mostly because when companies get big enough to be monopolies, they are too slow and bureaucratic to respond to new inventions (like Microsoft getting killed with phones and tablets now, or Kodak god killed by digital cameras). So nothing to do with my anarcho-capitalism. Just how business works

Calypso_1

Any group of companies who collude to fix prices are in essence operating a monopoly. The annals of the SEC provide abundant examples of such behavior.

Rassah

That’s price fixing/collusion, not monopoly. Smaller companies like Sprint and T-Mobile can collude to lower prices to steal customers from AT&T or Verizon, despite neither of those two being in monopoly power.

Calypso_1

I know what it is. See the word “essence”. Also “collude” & “fix prices” in my statement.
There comes a stage in the application of one’s mind to any subject where mere reliance upon formal definitions becomes inadequate to understanding the underlying nature of its reality. The benefits of parsing meta-concepts far exceed the domain of formalisms.

Rassah

There also comes a stage when you have to realize that, if you are having to make up words and terms to mean something they don’t, then maybe you are just trying to convince yourself of a lie. You can’t defend an idea, if you can’t even get a good grasp of what it is. This is why I said that “Monopoly” is a nebulous “boogie-man” type term thrown around in cases where it doesn’t apply, just to scare people.

All of those guys made millions by being brilliant, coming up with new inventions and business ideas, and working their asses off to see them come to reality. They didn’t sit on their asses at home, watching bitcoin prices go up.

Sure, some of those new Bitcoin millionaires have some intelligence and sills in business and finance, and will be the new wealthy elite as well, but honestly, from what I’ve seen, I think those will be in the extreme minority (case in point, people using bitcoins to buy $100k+ cars and trips to space).

Jin The Ninja

i said,

“many formerly ‘poor’ computer nerds now control trillions in assets, and
indeed have a high ability to manipulate markets and create monopolies.”

you said,

“If by “trillions” you mean a couple of million, and if by “manipulate” you mean use it to buy useless luxury things without concern for long time financial security, then sure.”

so… yes- a bunch of tech billionaires can influence and alter the market. you don’t dispute that obviously.

however,

“All of those guys made millions by being brilliant, coming up with new
inventions and business ideas, and working their asses off to see them
come to reality.”

no, they stole ideas from actual hapless nerds, paid pennies to prisons and the third world to manufacture goods, and rode the american corporate dream of planned obsolescence into destroying the planet

Rassah

Sorry, I made a mistake thinking that by “formerly poor computer nerds who control trillions” you meant bitcoiners who were formerly poor, but are now multmillionares. My mistake.
I know Bill Gates and especially Sergey didn’t steal anyone’s ideas to develop their OS and search engines, and as for Zuckerberg, I wouldn’t call the Winklevoss twins “hapless nerds.” As for those pennies paid to third world to manufacture goods, that alone was responsible for getting hundreds of millions of people out of poverty in India and China in the last decade, where the average wage in those countries is now so high now that they are not even cost effective to outsource to any more. Millions of people there went from destitute poverty of earning less than $1 a day, to a comfortable middle class earning way over $1,000 a month, while I guess your types were yelling about exploitation and stuff. Those thieving assholes are almost singlehandedly responsible for bringing the third world up to the level where it can compete with (and likely overtake) the rest of us.

Rhoid Rager

Your system of thinking about the world is devoid of morals, ignorant of history over 40 years ago, and reliant on faulty assumptions for the basis of human prosperity. This is likely due to your systematic indoctrination during your post-secondary education and subsequent career in industry. There is most likely nothing that we can say to you that would break the spell your inculcated world view; but, you should know that it is not a unique perspective–it is neither innovative nor novel. It is an ancient ideology of normalizing the practice of the strong preying on the weak. When systemized into some devious set of axioms in higher education it becomes a device to channel the creative energies of its adherents to do the bidding of those who purport to be their leaders.

I believe the only way for you to be shaken of these insidious ideas of a ‘free market’ and the ‘strength’ of the capitalist model is to personally witness its abject failings in your own life or in the life of others. It’s unfortunate that that has to be the case, but engrained ideas are seldom relinquished without some sort of trauma.

Rassah

It may also be because I came from Soviet Union, where my parents made a combined $300 a month, then my parents picked themselves up and moved to America, with two young kids (my brother and I were under 10 at the time), with less than $1,000 to their name, were working as janitors, washing floors when they first came here, and slowly moved up by working morning to dawn, and taking classes in the evening to change careers, until they reached six figure managerial positions.
Or with me growing up in a poor family, where McDonald’s was considered an expensive trip out, and sub $5 Christmas presents were the norm, where I *was* lucky enough to go to a good high school, but wasn’t accepted into a university due to bad grades (didn’t do any work in school), and ended up working part time while taking college classes, some times living on as little as $20 a month (seriously), before building up my grades to be able to get into an undergrad and grad university, paying for it all out of my own pocket.
Yes, this may have made me lose empathy for people who live in the first-word that has great opportunities, while they squander their lives. Especially when compared to the people in truly destitute countries who are pulling themselves out of poverty by hundreds of millions.

As for morals, I’d like to think I have a really high sense of morals and ethics. Heck, I run a charity fundraiser, sending out thousands of dollars a month. I just think it’s moral for people to be able to keep the products of their labor, and immoral to force someone to give charity to someone else under a threat of force (social programs). Plus I’ve seen all the really good stuff that this “free market” has done for India, China, Eastern Europe, and much of the rest of the world in the last 10 years, after it’s opposite has been ruining it for the preceding 70 years.

Andrew

I don’t agree that social programs amount to violently forced charity. Remember that money is a promise, an agreement, a form of speech, not real wealth. And it’s created from debt, by banks, according to the rules set by a government paid for by those who have a lot of it. When a person works for money, they’ve already agreed to give up the real products of their labor in favor of a unstable token of subjective value. Which is fine, but transferring some of that social agreement to others isn’t really theft.

Rassah

I see money as an IOU from the world for something that you have given it in return, whether that be your labor or your products. And this works regardless of whether that money is gold, debt-backed USD, or bitcoin. So how is giving something up for an IOU, and then having that IOU taken from you, in effect making you give up something for nothing, is not at the very least fraud, if not outright theft?
Regarding the original topic, I also don’t think “charity” under the threat of imprisonment is charity.

Lookinfor Buford

Rassah forget it.. The self-enlightened/aggrandized on this site will attack and attempt to ostracize anyone who attempts to hold discourse on a topic and stands on the side of classical education and facts. Their disdain for capitalism is so great that they will state ad nauseum that the sky is green and the dirt is blue, because they are all about brain washing people into believing that the brilliant men and women of our time actually know absolutely nothing, and we should instead all bow before and accept the beliefs of a few blogging-commies on the internets. Pay no attention to their lack of rationale and just agree happily with their group, or prepare for a long night.

Rassah

Oh, I also have to add that my views are not something I started out with, and which require me to shake them off in favor of the views like the ones you have. On the contrary, I was a socialist, proud-to-pay-taxes, pro government and balance between socialism and capitalism, new Keynesian economic theory democrat. It took a few years of questioning economics and ethics for me to get to where I am now,

VaudeVillain

Congratulations, I’m convinced that you understand neither currency nor e-mail. Best of luck in all your endeavors.

Rassah

That would be quite an accomplishment on my part, considering I used to be an IT manager for McD’s corp and a software developer, and am now a Senior Financial Analyst with a Masters in Finance and Economics. It’d be like getting a Masters in English Literature without knowing how to read.

So, what convinced you that I don’t know how POP3/SMTP servers work, or that I don’t understand currencies and the macroeconomics of money and global trade?

VaudeVillain

Well, you keep confusing the technical details of how something works for what it is and what it does, for one.

Like I said, best of luck.

Rassah

I said that email is a decentralized system that transmits text, person to person, which is just pure information
I also said that all money is technically value information, and that bitcoin is a decentralized system that transmits value person to person. I also added that email can’t transmit value information other than by saying that the value exists.

How am I wrong?

EDIT: Never mind, I don’t care.

Jin The Ninja

“Senior Financial Analyst”

that is what personally convinced me you have no idea about econ. matters.

Rassah

A bachelors in finance requires a minimum of 4 econ classes (basic and intermediate micro and macro), and my masters included advances, global econ environment, econ history and development, and managerial econ.

But I don’t have to decent myself. If you claim I don’t understand economics, its up to you to explain why. I can just as well claim that you don’t know anything about Japanese cooking, and leave it at that.

Jin The Ninja

i am well aware of the requirements of a b. comm/b. finance.

you certainly do not have to defend yourself. nor am i asking you to- i am acquainted with many middling finance grads who have difficulty finding meaning in anything but stock pages.

when a person studies an artificial construct such as the market, and attempts to predict its behaviour based on theoretical models that do not adhere to anything scientific or holistic, i question their understanding- nay- belief in an esoteric, inequitable, destructive force.

to conclude, i do not know very much about japanese “cooking;” rather i know a little bit about japanese cuisine. neither does a mention of pedestrian ‘egg-rice’ make one an expert.

Rassah

I guess you’ll be happy to know that I don’t value bitcoins based on theoretical stock valuations, or chart technicals voodoo, but instead value it based on its current and potential impact on business, and its usefulness as a technological tool as compared to the tools and services we have available.

In short, I don’t think that bitcoin is valuable because of its price graphs or economic and currency fundamentals, I value it because it is the first distributed programmable money in existence.

Kris Olhovsky

I think you fail to understand that the creator(s) of Bitcoin have no advantage over any other user of Bitcoin.

VaudeVillain

Other than having a head start on time, technical know-how and planning?

Honestly, it doesn’t matter who invented the snake oil, or when, or why, or what they did with it… it’s still fucking snake oil.

Rassah

The only way to tell whether something is snake oil or not is to examine how it works and what it does. If it’s claims don’t match up to it’s fictions, then it’s snake oil.
When did you examine what bitcoin does? And which of its claims did you find to be false?

VaudeVillain

When I discuss Bitcoin as a scam, you understand that I refer to the entire social movement, the speculators, and the myriad groups and individuals set up around the periphery to make money off of it, right?

Anyway, you clearly like it and want to be involved. That’s great, go nuts. Leave me the fuck out of it.

Rassah

Ah, sorry, that was not evident in your brief opinion of it. So, your opinion is that a tool like bitcoin is useless because of the type of people that are using it already? OK. Thanks for your explanation. Likewise, your participation is not necessary.

VaudeVillain

Useless? No, not exactly. Just a bad idea to buy into, because the people who are already there are bad, and the system in place to use it is essentially designed to let them fuck you over.

Some people see financial regulation as terrible burdens that prevent them from doing as they please, I view them as imperfect rules for making it harder for people to take advantage of each other and the system. Maybe you’re one of the former. Maybe you’re savvy enough, or ruthless enough, to make that work for you. I have no confidence that I am, nor do I have any interest in finding out or reason that i have to.

If my participation, or at least approval, is not necessary, then why have you spent so much time replying to my comment trying to convince me how great Bitcoin is? Surely a Senior Financial Analyst with a background in corporate IT could have been doing something more productive.

Jon Stern

The dollar has seen massive swings, as well as the Euro and most other fiat currencies. Bitcoin’s value is much higher than $1000, $5000 or even $10,000. Fiat currencies have been devalued to hell and are close to worthless. We need a decentralized alternative. Whether that’s Bitcoin or another encrypted currency, we will see. But more disruption is what we need to overcome the pseudo-economic, for the rich only economy we have now.

kowalityjesus

They’re double agents at disinfo…all for the sake of irony!!

IMO there is quite a nifty bag that one can place ‘anything you see on TV’ in.

batmanroxus

Bitcoin rocks and promises to make the world bank, including the federal reserve, obsolete, thank God.

Rhoid Rager

I think it’ll take more than that. Especially since the Fed and world bank are backed by the military.

Rassah

Military just wants to get paid. They don’t care if it’s with dollars or bitcoins. Examples are USSR military and Iraq military after old currency or government collapsed.

Jin The Ninja

pol sci 101: the military are state actors.

everything that is wrong with your statement is contained within my first sentence.

Rassah

Are you claiming that the military (the soldiers running it) will continue to support a government that is so poor and broken that it can’t even pay their paychecks? I don’t think that ever happened in the history of the world…

Jin The Ninja

lol. no, i am saying a gov’t would not let a currency that arose from the ether of the internet debase its central bank currency. the military IS the gov’t, enacting its foreign and often times social policy- not a separate entity. bitcoin is sadly, very much ‘part of the system’- the minute it became ‘public,’ began being traded, being converted. being part of the market entity.

however, i find it VERY disturbing that you assert this worldview:
“he who controls the bitcoins, controls the world.”

Rassah

however, i find it VERY disturbing that you assert this worldview:
“he who controls the bitcoins, controls the world.”

If I am asserting it somehow, at least be glad knowing that bitcoin cannot be controlled by anyone. Not even a military. At least I don’t think it can. As soon as a government or a military can figure out how to control peer-to-peer file sharing, we’ll know they may be able to control bitcoin as well.

Jin The Ninja

you’re not very well-versed in either history or ethics.
the US gov’t is the single largest holder of bitcoin.

you also have a very short memory.
you said whomever has the bitcoins to pay the military, will then control the military. and who might that be? a benevolent corporate overlord or an egomaniac billionaire?

genuine question:
if nation-states are subverted to market forces, that is to say if ‘free markets’ replace govts- should nation-states even still exist at all? why even have military? the military, as i stated previously is simply an extension of the nation-state. no nation-state, no military. or am i missing something here?

Rassah

you’re not very well-versed in either history or ethics.

That’s your opinion, and you’re entitled to it.

the US gov’t is the single largest holder of bitcoin.

FBI has 196,000 btc. Winklevos brothers have 210,000. Some early adopters have even more than that. Satoshi may have as much as a million. But it doesn’t matter, because they still can’t control bitcoin like governments can control their own currencies.

you said whomever has the bitcoins to pay the military, will then control the military. and who might that be?

That is not what I said. Someone else made the claim that the US dollar is supported, or propped up, by the US military, and I simply pointed out that the US military will support whatever currency pays their paychecks. If the dollar, or the country, starts having trouble, they’re not going to keep supporting it out of some sense of moral duty. No military has before.
As for who might that bebe, should the USD fall? Right now it’s a group of corporatist megalomaniacs who never have to face the consequences of their decisions (What did Bush or republican senators get for starting the wars? Or any of the people who accidentally droned wedding parties?) Even if the alternative is horrible, at worst we’ll have what we have now. At least a corporation might take into consideration that going to war is expensive and unprofitable.

if nation-states are subverted to market forces, that is to say if ‘free markets’ replace govts- should nation-states even still exist at all?

If people want them to be, why not? My guess, though, is that they will be voluntary and exclusive organizations that provide services regular private companies can’t, and I hope they won’t be based on geography, since arbitrary geographic borders just don’t make sense any more. So, like a club membership you can join wherever you live, based on culture, representation, and services you want.

why even have military?

Good question. War of conquest is always less profitable than trade, almost without exception. I would much rather have private security, which only provides as much security as needed, not an aircraft carrier for every terrorist cell in the Middle East.
There is also the really obnoxious fact of life that the military and police are paid for with people’s taxes, and then used to keep those same people from protesting or standing up to oppressive or destructive factories and businesses. These businesses write their own regulations, pay off senators to pass them into law to make what they are doing technically “legal,” and then have the people they are screwing over literally pay to keep themselves downdown (taxes to police/milliary). Without such publicly funded military, and no nation states to declare their damage and oppression “legal,” these businesses would have to deal with the threat of protests, riots, and vandalism personally, which means paying for private security out of their own pockets, which would mean that doing bad or unpopular things would lead to actual, real costs to the business, and that being a good business may actually end up being more profitable.

Kris Olhovsky

It’s still in the startup phase — growing exponentially. When the massive and rapid growth of bitcoin ends, and when bitcoin has more developed financial tools that tame bubbles (like the ability to short), the value will begin to stabilize.

Kris Olhovsky

This site is using Disqus, so the site owner cannot censor this discussion. If you were unable to post your comment, then maybe you had a browser/internet issue. On the other hand, did you actually look through all the comments? Is yours the “against free speech” comment?

Speaking of being courageous, I see that you have opted to write as an anonymous “guest”. Such courage.

HalfTonSon

Whatever it’s done over the course of the year, if anything loses 30% of its value in a few days that’s called a crash.

Rassah

Keep in mind that Twitter and Facebook both crashed by that definition dozens of times before they went public with IPO. The rest of the population just wasn’t given a chance to see that. Bitcoin is likely the first time the public was allowed to be given a glimpse of how most companies out there grow before getting to an IPO.

HalfTonSon

The writer compared Bitcoins to stocks (favorably), which are shares of publicly traded companies. Private companies funded by VC or whatever are probably more relevant, true. But a stock that drops from $1,200 to $600 in a matter of weeks has “crashed” by any definition. I’m intrigued by Bitcoins like many people but to tout them as a rational long-term investment given their short, volatile history is either insane or self-serving.

Rassah

And I am saying that these kinds of crashes are normal and expected in pre-IPO stocks and valuations. Twitter went from $0 to $10 billion in 4 years, and Facebook even higher. Yes, before a company gets a high stable valuation, you shouldn’t risk investing more than you are willing to lose. Same applies to bitcoin.

http://www.sacredgeometryinternational.com/ Camron Wiltshire

Thank you David!

Andrew

A question: How can Bitcoin benefit those who can’t afford computers, or don’t have access to them?

Rassah

Don’t need computers, just cell phones. In Kenya there are more cell phones than people, and they use cell phones to pay for everything using M-Pesa service. Problem is M-Pesa charges up to 10% fee per transaction, and still limits everyone to only M-Pesa, and thus only locally in Kenya. There is a bitcoin service rolling out that will allow people anywhere in the world to send bitcoin to anyone else in the world, also using their cell phones, for a much smaller fee (I don’t remember if it’s 1% or less)

http://touchlab.co/ Kevin Galligan

“Find me a stock that has gained 54x during the same time period…” Find me a stock that has jumped to over 100x in that same time period, then bottomed out below half in a month, and I’ll show you a stock to stay the hell away from if you aren’t a crazy gambler or a highly sophisticated speculator. Even then. Show me a CURRENCY with that kind of volatility and I’d suggest you move far away from whatever country that currency is active in.

I was introduced to bitcoin very early. I was at some hack thing and a guy was building some kind of Android app for it. Sounded neat, but my experience with financial markets made me ask the same questions then as now. Most governments don’t allow alternate currencies, so why is this different? To be mainstream, it’ll need to be regulated, and if it needs to be regulated, most people will skip it because, although banking transactions and whatnot should be lower, they’re not enough of a hassle to risk your capital.

For mainstream businesses to accept bitcoin, and actually hold balances in it, you would need a serious government “thumbs up” that it’ll be tolerated as an alternate currency, and something resembling “stability”. Otherwise, its just another highly volatile investment. I would expect any serious business that accepts bitcoin to immediately exchange their coins for “standard” currency. Why wouldn’t they?

Blame the media all you want, but if a few articles could double or half a country’s currency, you wouldn’t hold it, and I’d suggest you move at your earliest opportunity. Not expecting bitcoin to go away, and if people want to speculate, knock yourselves out, but to say its anything but incredibly volatile and uncertain is being seriously misleading. It could go to $2000+, or $20, depending on external and unpredictable forces. And, apparently, very quickly.

If bitcoin gains steam, it’ll eventually have to submit to the same regulation and monitoring as other currencies. Then we’re just talking about fee reduction, maybe.

Ehh, nobody cares. Good luck with your bitcoin investment and book.

Rassah

Find me a stock that has jumped to over 100x in that same time period, then bottomed out below half in a month, and I’ll show you a stock to stay the hell away from if you aren’t a crazy gambler or a highly sophisticated speculator.

How about Twitter, Facebook, and likely every other stock before it went public in an IPO? That’s what things do when they start from $0, and in 4 years reach $10 billion like Twitter (and Bitcoin), or $100 billion like Facebook. The public is just not allowed to see any of that volatility until the IPO, by which time the stock is already much more stable, and most of the profit was taken by the initial investors. Bitcoin is shocking to people because it’s their first public glimpse at what happens in stock investments during their private stages.

Blame the media all you want, but if a few articles could double or half a country’s currency, you wouldn’t hold it.

Just out of curiosity, what do you believe would happen if a couple of articles came out saying that China decided to abandon the USD for something else, and was trying to dump all their dollar holdings as quickly as it could before everyone else had a chance to?